Monday, March 21, 2011

Durham Released On $1 Million Bond

Indicted Ponzi scheme operator Tim Durham has been released after posting a $1 million bond at his detention hearing in L.A. this afternoon on the condition he appear before a federal court in Indianapolis by April 4 and be placed on home detention in the Indianapolis area according to WRTV. "He will be subject to home detention with electronic monitoring. He will essentially be restricted to his residence, except for job, work, doctors appointment, etc." U.S. Attorney Thom Mrozek said in an email. Durham and his co-conspirators, Jim Cochran and Rick Snow face 12 counts of wire and securities fraud charges in the U.S. District Court of Indianapolis related to their mismanagement of Fair Finance Co. in Ohio that resulted in the loss of more than $200 million by more than 5,000 small investors in Ohio.

Durham has been living in L.A. since the FBI raided his businesses in November, 2009 under the suspicion he had been operating Fair Finance as a Ponzi scheme after he and his business partners looted the company over a three year period following its purchase in 2002 for the benefit of other companies in which he owned an interest, and to finance his lavish lifestyle that included large homes, expensive collector cars, a yacht and a private jet. Durham has been serving as the CEO of National Lampoon after its former CEO, Dan Laikin, was found guilty and sent to prison for securities fraud-related charges involving a scheme under which he pumped the price of National Lampoon's stock by paying bribes to stock brokers to promote the sale of shares in the struggling company. It is unclear who will run the company now that Durham is being forced to relocate to Indianapolis and remain on home detention here until he and his business partners are tried.

According to an L.A. Business Journal report, National Lampoon could be liable if it is determined Durham acted criminally to benefit the company. The business magazine also speculates that National Lampoon could be sold as part of the efforts of the bankruptcy trustee for Fair Finance to recover money bilked from the Ohio investors. The SEC has also filed a $207 million civil lawsuit seeking restitution from Durham and his partners for the defrauded investors. The L.A. Business Journal says industry observers have wondered why National Lampoon has been run by people who know nothing about the film industry. "In the Laikin and Durham years, a stream of producers and studio executives wanted to help revitalize the company, but soon realized that the top people at National Lampoon didn’t know how to produce movies and even shunned help when offered," the business newspaper reported. National Lampoon's shares were delisted after its stock price fell below $1 for an extended period. The stock now trades on the Pink Sheet for 3 cents a share.

In an unrelated development, the stock price for Indianapolis-based Brighpoint fell more than 15% today, closing at $10.70 a share and making it one of the 10 top stock losers on Wall Street today. Brightpoint's CEO, Robert Laikin, is the brother of National Lampoon's convicted former CEO Dan Laikin. Fortune magazine recently named Brightpoint one of the most admired companies in America. A Wall Street Journal report today suggested Brightpoint could be a loser in the announced acquisition of T-Mobile by AT&T. T-Mobile has been a major customer of Brightpoint. The report speculated that AT&T might choose other cell phone providers with whom it currently does business rather than continuing T-Mobile's relationship with Brightpoint. Allegations made in the bankruptcy trustee's lawsuit against Durham-owned companies suggests Durham and others may have made millions during an unusual run-up of Brightpoint's stock several years ago before selling off the stock. The trustee's complaint alleges Durham used Fair Finance money to finance speculation in Brightpoint stock as part of an investment group that included Dan Laikin. The largest purchasers of Brighpoint stock during the period examined by the trustee included Durham and the family of Obsidian Vice-President Anthony Schlichte, whose investments in Brightpoint stock exceeded $25 million. Interestingly, one of the other largest active traders in Brightpoint's stock at the same time as Durham was none other than Bernie Madoff, who purchased the shares on his personal account according to Bash, lending further credence to a whistleblower's claim of a stock pumping scam with Brightpoint stock as occurred with National Lampoon's stock.

1 comment:

HOOSIERS FOR FAIR TAX said...

I hope people stake out the road to his house and monitor who comes and goes.